The rapid fall led wind power trade body RenewableUK to claim offshore wind is now the cheapest form of energy in the UK. The cost is less than half the controversial amount promised to EDF Energy to deliver Hinkley Point C, a nuclear power station in Somerset that is also due online in 2025.

In the auction, companies try to outbid each other to build windfarms. The price starts high, but reduces as each company says they can fulfil the contract for cheaper. The UK government doesn’t actually directly pay for the building or running of the windfarms, but instead guarantees a minimum price households and businesses will pay for the energy generated over a 15 year period.

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Winning projects include Equinor and SSE’s Dogger Bank extension off the Yorkshire coast, SSE’s Seagreen off the coast of Dundee and Innogy’s Sofia project, also in the Dogger Bank area. Onshore windfarms on the Isle of Lewis and Orkey won contracts too, after ministers partially repealed a ban on onshore wind subsidies.

Jonathan Marshall of the Energy and Climate Intelligence Unit and Gareth Miller of Cornwall Insight both say the new low price is “way below” the £45 to £50 that had been expected by analysts.

Windfarms totalling six gigawatts of capacity will be built, enough to power more than seven million of the UK’s 26 million homes. However, experts pointed out the figure could have been even higher if the government had not capped the amount of capacity it was willing to back.

In a statement, prime minister Boris Johnson said: “It’s great news that millions more homes will be powered by clean energy at record low prices.”

Hugh McNeal of Renewable called the results: “the biggest single step that the UK has taken towards meeting our net zero emissions target.” Greenpeace said there was now no excuse for the government not to raise its ambition on climate change.

Significantly, the price agreed in the new contracts is so low that householders and businesses – who ultimately pay for the subsidies through energy bills – should pay very little.

The £39.65 per MWh is a guaranteed price for electricity generators, a ‘top up’ if wholesale prices fall below it. However, the market price of electricity is around £50 per MWh, suggesting no subsidy will be paid if wholesale prices are the same in 2025. Theoretically, billpayers could even see energy bills falling as a result.